2014 First Half Results

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2014 First Half Results

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2014 First Half Results

  1. 1. 1 H1 2014 Results Presentation Legal Notice DISCLAIMER This document has been prepared by Iberdrola, S.A. exclusively for use during the presentation of financial results of the first semester of the 2014 fiscal year. As a consequence thereof, this document may not be disclosed or published, nor used by any other person or entity, for any other reason without the express and prior written consent of Iberdrola, S.A. Iberdrola, S.A. does not assume liability for this document if it is used with a purpose other than the above. The information and any opinions or statements made in this document have not been verified by independent third parties; therefore, no express or implied warranty is made as to the impartiality, accuracy, completeness or correctness of the information or the opinions or statements expressed herein. Neither Iberdrola, S.A. nor its subsidiaries or other companies of the Iberdrola Group or its affiliates assume liability of any kind, whether for negligence or any other reason, for any damage or loss arising from any use of this document or its contents. Neither this document nor any part of it constitutes a contract, nor may it be used for incorporation into or construction of any contract or agreement. Information in this document about the price at which securities issued by Iberdrola, S.A. have been bought or sold in the past or about the yield on securities issued by Iberdrola, S.A. cannot be relied upon as a guide to future performance. IMPORTANT INFORMATION This document does not constitute an offer or invitation to purchase or subscribe shares, in accordance with the provisions of Law 24/1988, of 28 July, on the Securities Market, Royal Decree-Law 5/2005, of 11 March, and/or Royal Decree 1310/2005, of 4 November, and its implementing regulations. In addition, this document does not constitute an offer of purchase, sale or exchange, nor a request for an offer of purchase, sale or exchange of securities, nor a request for any vote or approval in any other jurisdiction. The shares of Iberdrola, S.A. may not be offered or sold in the United States of America except pursuant to an effective registration statement under the Securities Act of 1933 or pursuant to a valid exemption from registration. 2
  2. 2. 2 FORWARD-LOOKING STATEMENTS This communication contains forward-looking information and statements about Iberdrola, S.A., including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, capital expenditures, synergies, products and services, and statements regarding future performance. Forward-looking statements are statements that are not historical facts and are generally identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions. Although Iberdrola, S.A. believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Iberdrola, S.A. shares are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Iberdrola, S.A., that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the documents sent by Iberdrola, S.A. to the Comisión Nacional del Mercado de Valores, which are accessible to the public. Forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of Iberdrola, S.A. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date they were made. All subsequent oral or written forward- looking statements attributable to Iberdrola, S.A. or any of its members, directors, officers, employees or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements included herein are based on information available to Iberdrola, S.A. on the date hereof. Except as required by applicable law, Iberdrola, S.A. does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Legal Notice 3 Agenda Highlights of the period Analysis of results 4 Financing
  3. 3. 3 Net Profit of Eur 1,503 MNet Profit of Eur 1,503 M Highlights of the Period Good operational performance continues to offset impact of regulatory measures in Spain Good operational performance continues to offset impact of regulatory measures in Spain 5 EBITDA amounts to Eur 3,745 M in line with previous year…EBITDA amounts to Eur 3,745 M in line with previous year… Net Debt reduction of more than Eur 2,200 M from H1 2013 Leverage down to 41.8% from 44.3% Net Debt reduction of more than Eur 2,200 M from H1 2013 Leverage down to 41.8% from 44.3% … despite higher Net Op. Expenses due to increased activity and non recurring items whose impact will be reduced along the year … despite higher Net Op. Expenses due to increased activity and non recurring items whose impact will be reduced along the year 19% 43%4% 34% EBITDA by business 6 EBITDA EBITDA amounts to Eur 3,745 M, in line with H1 2013EBITDA amounts to Eur 3,745 M, in line with H1 2013 Regulated Generation Networks Regulated businesses Generation & Supply Renewables +0.7% excluding exchange rate impact+0.7% excluding exchange rate impact
  4. 4. 4 +Increased asset base in UK +Rate Cases and transmission remuneration in US +Increased asset base in UK +Rate Cases and transmission remuneration in US 7 EBITDA – Networks Good operational performance is impacted by regulation in Spain and drought in Brazil Good operational performance is impacted by regulation in Spain and drought in Brazil Variation in EBITDA H1 2014 vs. H1 2013 Operational performanceOperational performance Non-operational impactsNon-operational impacts Exchange rate effectExchange rate effect - Regulatory impact in Spain - Drought impact in Brazil (to be recovered through tariff increase ) - Regulatory impact in Spain - Drought impact in Brazil (to be recovered through tariff increase ) EBITDA drops 4.5% to Eur 1,655 MEBITDA drops 4.5% to Eur 1,655 M -0.7%-0.7% +1.1%+1.1% -4.9%-4.9% +Higher production +Better generation mix +Good results of gas business +Higher production +Better generation mix +Good results of gas business 8 EBITDA – Generation&Supply Higher output, better generation mix and gas business results offset lower prices and one-off adjustments to contracts in Mexico Higher output, better generation mix and gas business results offset lower prices and one-off adjustments to contracts in Mexico Variation in EBITDA H1 2014 vs. H1 2013 Operational performanceOperational performance Non-operational impactsNon-operational impacts Exchange rate effectExchange rate effect - Impact of new regulation in Spain +Other non recurring impacts - Impact of new regulation in Spain +Other non recurring impacts EBITDA increases 27% to Eur 1,452 MEBITDA increases 27% to Eur 1,452 M -0.1%-0.1% +23.2%+23.2% +3.9%+3.9%
  5. 5. 5 +Record wind production +Improved results in UK and US +New capacity (offshore and Latam) +Record wind production +Improved results in UK and US +New capacity (offshore and Latam) 9 EBITDA – Renewables Despite record wind production, results heavily affected by regulation in Spain and low spot prices Despite record wind production, results heavily affected by regulation in Spain and low spot prices Variation in EBITDA H1 2014 vs. H1 2013 Non-operational impactsNon-operational impacts Exchange rate effectExchange rate effect - Impact of new regulation in Spain- Impact of new regulation in Spain EBITDA falls 20.3% to Eur 713 MEBITDA falls 20.3% to Eur 713 M Operational performanceOperational performance -1.4%-1.4% +6.5%+6.5% -25.4%-25.4% FFO Net Inv. FFO - Net Inv. 10 Operating Cash Flow (FFO) exceeding investments across all businesses Operating Cash Flow (FFO) exceeding investments across all businesses Operating Cash Flow Global figures include Corporation and Other Businesses Eur M 2,856 1,199 1,657 10 FFO Net Inv. FFO - Net Inv. FFO Net Inv. FFO - Net Inv. FFO Net Inv. FFO - Net Inv. NetworksGen&SupplyRenewables 1,208 615 1,157 593 115 567 1,042 430 1. FFO = Net Profit + Minority Results + Amortiz.&Prov. – Equity Income– Net Non-RecurringResults + Fin. Prov.+ Goodwill deduction + Dividends from companies accountedvia equity – /+ reversion of extraordinary tax provision 2. Investment net of grants and ex-capitalised costs 13721
  6. 6. 6 Balance Sheet Management Continuous improvement of our financial strengthContinuous improvement of our financial strength Net Debt reduced by more than Eur 2,200 M from H1 2013 (Eur -1,154 M in H1 2014) to Eur 25,682 M1 Net Debt reduced by more than Eur 2,200 M from H1 2013 (Eur -1,154 M in H1 2014) to Eur 25,682 M1 11 Solid financial ratiosSolid financial ratios Leverage down to 41.8% vs. 44.3% in H1 2013Leverage down to 41.8% vs. 44.3% in H1 2013 Divestments exceeding Eur 860 MDivestments exceeding Eur 860 M Control of investments: Eur 1,200 M in H1 2014Control of investments: Eur 1,200 M in H1 2014 1. Including Eur 1,324 M of Tariff Deficit (AdjustedNet Debt amounts to Eur 24,237 M) Regulation Highlights 12 SpainSpain UKUK USAUSA MexicoMexico BrazilBrazil • Conclusion of the reform of the renewables remuneration scheme (RD 413/2014 and Order IET/1045/2014) • Conclusion of the reform of the renewables remuneration scheme (RD 413/2014 and Order IET/1045/2014) • RIIO ED1: Business Plan already submitted. Draft with distribution remuneration conditions to be published this month by Ofgem • RIIO ED1: Business Plan already submitted. Draft with distribution remuneration conditions to be published this month by Ofgem • CMP (Maine): pre-agreement with regulator to reach ROE of 9.45%1 for distribution from July 2014 • CMP (Maine): pre-agreement with regulator to reach ROE of 9.45%1 for distribution from July 2014 • The Energy Reform brings new business opportunities with large private consumers • The Energy Reform brings new business opportunities with large private consumers • The regulator is implementing measures to compensate the drought impact on distribution companies • The regulator is implementing measures to compensate the drought impact on distribution companies 1. Nominal y and post-tax
  7. 7. 7 13 Guidance 2014 H1 results allow us to reaffirm our guidance for FY 2014H1 results allow us to reaffirm our guidance for FY 2014 NetworksNetworks • No new impacts of regulation in Spain • Drought impact in Brazil progressively recovered through tariff increase and additional funds • No new impacts of regulation in Spain • Drought impact in Brazil progressively recovered through tariff increase and additional funds =/+=/+ Generation & Supply Generation & Supply • Normalisation of production conditions • Normalisation of gas market conditions • Normalisation of production conditions • Normalisation of gas market conditions ++ RenewablesRenewables • New capacity in operation (US and Latam) • No new significant impact of regulation in Spain • New capacity in operation (US and Latam) • No new significant impact of regulation in Spain -- Net Op. ExpensesNet Op. Expenses • Additional measures to control expenses• Additional measures to control expenses == EBITDAEBITDA H2 2014 Expected trend Guidance FY 2014 A Resilient Business Model Throughout the years, our model has proven its strength to deliver results under a range of very different scenarios… Throughout the years, our model has proven its strength to deliver results under a range of very different scenarios… 14 Business portfolio • Focus on regulated businesses • Geographic diversification Business portfolio • Focus on regulated businesses • Geographic diversification Strict investment criteria • Security + Profitability + Execution period • Limited to cash flow generation Financial strength • Net debt reduction • Improving credit metrics • Control exchange rate and interest rate risk ++
  8. 8. 8 … Eur 0.144 per share in July…… Eur 0.144 per share in July… … Eur 0.126 per share in January…… Eur 0.126 per share in January… In line with our commitment, remuneration to shareholders during the year has amounted to Eur 0.275 per share… In line with our commitment, remuneration to shareholders during the year has amounted to Eur 0.275 per share… … an additional Eur 0.005 per share As attendance premium to Annual General Meeting … an additional Eur 0.005 per share As attendance premium to Annual General Meeting 15 … allowing the Company to maintain shareholder remuneration … allowing the Company to maintain shareholder remuneration Shareholder Remuneration Agenda Highlights of the period Analysis of results 16 Financing
  9. 9. 9 Eur –369 M of regulatory impacts accounted for in H1 2014 Estimated full year incremental Gross Margin impact in 2014 vs 2013 of Eur -367 M* Eur –369 M of regulatory impacts accounted for in H1 2014 Estimated full year incremental Gross Margin impact in 2014 vs 2013 of Eur -367 M* Regulatory impacts in Spain 17 Eur M Total impact Distribution -56 Capacity payments -38 Cogeneration -6 Renewables -227 -367 -241 -495 -215 -369 H1’14 vs H1’13 H1’14 vs H1’13 Est. ∆ FY‘14 vs FY’13 Est. ∆ FY‘14 vs FY’13 Standard year estim. Standard year estim. 0 -40 -8 -78 -112 -70 -20 -78Social Bonus (Accounted for at EBITDA level) -42 -276 -122 Accounted FY 2013 Accounted FY 2013 -112 -30 -12 0 The impact in the second half of the year should be similar to the one of H2’13 as regulatory cuts started to be accounted in July 2013 The impact in the second half of the year should be similar to the one of H2’13 as regulatory cuts started to be accounted in July 2013 -643 -363 FY 2014 est. impact FY 2014 est. impact -112 -70 -20 -78 + *Includes Eur -78 M of Social Bonus accounted for at EBITDA level Distribution remunerationDistribution remuneration -345 18 Eur M Total impactTotal impact Regulatory impacts in Spain Annual impact in 2014 of all measures introduced since 2011 Annual impact in 2014 of all measures introduced since 2011 -1,395-1,395 Generation taxesGeneration taxes -496 Capacity paymentsCapacity payments -70 Social bonusSocial bonus -78 Cogeneration remunerationCogeneration remuneration -20 Renewables remunerationRenewables remuneration -363 Green centGreen cent -23 As a result of the implementation of RD-Law 13/2012, Law 15/2012 and RD-Law 9/2013 As a result of the implementation of RD-Law 13/2012, Law 15/2012 and RD-Law 9/2013
  10. 10. 10 Var. %Var. %H1 2014H1 2014 Net Op. Expenses Eur M H1 2013H1 2013 Income Statement – Group EBITDA Operating Profit (EBIT) Reported Net Profit 03,744.7 3,743.6 n/a2,359.1 672.9 -13.01,503.1 1,728.0 Net Financial Expenses -7.2-510.6 -550.4 -1,689.0 +4.2-1,620.2 Gross Margin 6,170.8 -0.86,218.0 Recurring Net Profit -7.51,296.7 1,402.0 Revenues 15,185.4 -4.515,893.7 Operating Cash Flow* 19 -3.9%2,855.7 2,972.4 Levies -737.1 -13.7-854.1 2014 and 2013 First Half are reported under IFRS11 Largest impact is the deconsolidation of Neo EBITDA, not affecting Net Profit 2014 and 2013 First Half are reported under IFRS11 Largest impact is the deconsolidation of Neo EBITDA, not affecting Net Profit *Net Profit + Minority Results + Amortiz.&Prov. – Equity Income – Net Non-Recurring Results + Fin. Prov.+ Goodwill deduction + Dividends from companies accounted via equity– /+ reversion of extraordinary tax provision Gross Margin - Group Gross Margin falls 0.8% to Eur 6,170.8 M, FX impact of Eur -47 MGross Margin falls 0.8% to Eur 6,170.8 M, FX impact of Eur -47 M Revenues -4.5% (Eur 15,185.4 M), and Procurements -6.8% (Eur -9,014.5 M) due to lower cost mix Revenues -4.5% (Eur 15,185.4 M), and Procurements -6.8% (Eur -9,014.5 M) due to lower cost mix 20 Revenues (Eur M) H1 2013 H1 2014 -4.5% 15,893.7 15,185.4 Procurements (Eur M) H1 2013 H1 2014 -6.8% -9,675.7 -9,014.5
  11. 11. 11 Net Operating Expenses - Group Net Operating Expenses* up 4.2%, to Eur -1,689.0 M, due to timing of costs in Q2, which will normalise in H2 2014 Net Operating Expenses* up 4.2%, to Eur -1,689.0 M, due to timing of costs in Q2, which will normalise in H2 2014 Net Operating Expenses % vs H1’13% vs H1’13H1 2014H1 2014 Eur M TotalTotal -1,689.0 +4.2% +5.9%+5.9% +2.7%+2.7% -838.7 -850.3 Net External Services Net External Services Net Personnel Expenses Net Personnel Expenses *Excludes Levies 21 Recurring Net Operating Expenses up 3.0% driven by activity increase in UK and other Recurring Net Operating Expenses up 3.0% driven by activity increase in UK and other Recurring Net Op. Exp. % vs H1’13% vs H1’13H1 2014H1 2014 -1,702.9 +3.0% +2.2%+2.2% +3.8%+3.8% -876.5 -826.4 Spain Eur -504.6 M UK Eur -210.0 M Rest Eur -139.5 M Levies Levies fall 13.7% (Eur -117 M) to Eur -737.1 M, due to lower Levies in the UK (Eur +59 M vs H1’13), as a consequence of the extension of ECO programme extension, and … Levies fall 13.7% (Eur -117 M) to Eur -737.1 M, due to lower Levies in the UK (Eur +59 M vs H1’13), as a consequence of the extension of ECO programme extension, and … 22 … the favourable High Court ruling on CO2 allowances in Spain (Eur +111 M), corresponding to the legal actions initiated when previous Government penalised emissions-free technologies … the favourable High Court ruling on CO2 allowances in Spain (Eur +111 M), corresponding to the legal actions initiated when previous Government penalised emissions-free technologies -854.1 H1 2013 -848.1 H1 2014 Eur M Positive ruling CO2 allowances Spain Eur -449.6 M UK Eur -152.0 M Rest Eur -135.5 M -737.1 +111
  12. 12. 12 … and 3.8% excluding fx impact, driven by the regulatory measures in Spain and part of the drought impact in Brazil not yet compensated … and 3.8% excluding fx impact, driven by the regulatory measures in Spain and part of the drought impact in Brazil not yet compensated Networks EBITDA decreases 4.5% to Eur 1,654.6 M …Networks EBITDA decreases 4.5% to Eur 1,654.6 M … Results By Business Networks EBITDA by Geography (%) 23 Brazil 26% 3% 42% 29% United Kingdom United States Spain Financial Highlights (Eur M) H1’14H1’14 Gross Margin Net Op. Exp. 2,454.0 -588.2 EBITDA 1,654.6 % vs H1’13 % vs H1’13 -1.9% +4.4% -4.5% EBITDA performance by geography is as followsEBITDA performance by geography is as follows 24 SpainSpain Results By Business Networks EBITDA EBITDA -7.5%, as a consequence of lower recognised revenues in Spain due to RDL 9/2013, not in force in H1 2013 EBITDA +6.8%, with higher revenues as a result of increasing asset base, as a consequence of greater investments, and GBP revaluation EBITDA -0.2%, with higher revenues as a result of Rate Cases and MPRP, offset by the exchange rate impact (EBITDA ex FX: +4.3%) EBITDA -52.0%, due to lower compensation on higher drought impact (Eur -32 M) to be recovered from August (tariff review). BRL devaluation -18.8% (Eur -9 M at EBITDA level) UKUK USUS BrazilBrazil
  13. 13. 13 Generation & Supply Business EBITDA up 27.0% to Eur 1,451.7 MGeneration & Supply Business EBITDA up 27.0% to Eur 1,451.7 M Results By Business Generation & Supply EBITDA by Geography (%) 25 10% 71% 17% United Kingdom Mexico Spain 2% US Gas Financial Highlights (Eur M) Net Op. Exp. EBITDA H1’14H1’14 Levies Gross Margin Net Op. Exp. 2,577.0 -718.3 -406.9 EBITDA 1,451.7 % vs H1’13 % vs H1’13 +8.2% +4.0% -25.9% +27.0% Strong operational performance together with CO2 allowances court ruling Strong operational performance together with CO2 allowances court ruling 26 SpainSpain Results By Business Generation & Supply EBITDA EBITDA +39.8% + Output +13.6%* + Lower procurement costs + Eur 132 M one off results in the Gas business in H1 + Lower Levies due to CO2 allowances court ruling (Eur +111 M) EBITDA +8.6% (EBITDA ex-fx impact: +4.9%) + Improvement in Generation and Wholesale margin despite Carbon Tax and higher non energy costs (ROCs, T&D,…) + Lower Levies due to ECO extension to March 2017, reversed partially in Q4 - Retail business Gross Margin drops 7.4% vs last year in local currency - Lower demand due to weather conditions EBITDA up Eur 46 M taking advantage of extreme weather in Q1 UKUK US GasUS Gas EBITDA -26.5% due to a negative one-off impact coming from the renegotiation of private contracts, revising them to new more favourable conditions MexicoMexico EBITDA performance by geography is as followsEBITDA performance by geography is as follows * Includes cogeneration
  14. 14. 14 … despite the positive performance from the rest of the geographies… despite the positive performance from the rest of the geographies EBITDA falls 20.3% to Eur 712.8 M driven by Spain …EBITDA falls 20.3% to Eur 712.8 M driven by Spain … Results By Business Renewables EBITDA evolution by Geography 27 RoW United States United Kingdom Spain Latam +80% +11% -41% -46% +8% Financial Highlights (Eur M) H1’14H1’14 Gross Margin Net Op. Exp. 1,057.3 -272.5 EBITDA 712.8 % vs H1’13 % vs H1’13 -16.2% +0.5% -20.3% Operating capacity +0.4%* (13,548 MW) Higher output** +0.5% (18,043 GWh): Strong average load factor (30.6%; -0.1 pp) Operating capacity +0.4%* (13,548 MW) Higher output** +0.5% (18,043 GWh): Strong average load factor (30.6%; -0.1 pp) 28 Results By Business Renewables SpainSpain EBITDA -46%, due to regulatory measures and low spot prices, despite solid load factor EBITDA +11%, higher operating capacity underpinned output increase (+6.9% onshore). Lower price was offset by FX. Offshore wind farm started its contribution EBITDA +8%, due mainly to a production increase (+2%) and trading profits due to weather conditions. Higher prices were offset by FX (EBITDA ex-fx impact 12.4%) EBITDA +80%, due to higher installed capacity in Mexico (+11%) and Brazil (+97%), output increased 34%. 18.8% Real depreciation affected negatively UKUK USUS LatamLatam EBITDA -41%, due to the sale in 2013 of Polish wind farms, 184 MWRoWRoW * Full Operating capacityat the end of the period. ** 1H 2013 operatingfigures under IFRS11: Operating capacity13,493 MW and Output 17,962 GWh *** OPEX does not include levies: adjusted by one-off and non-recurring. Weighted Average price -18.0% (to Eur 56.7/MWh): due to 38% lower average price in Spain Net Op. Expenses***/Average Op. Capacity: 0.1% improvement in cost per MW Weighted Average price -18.0% (to Eur 56.7/MWh): due to 38% lower average price in Spain Net Op. Expenses***/Average Op. Capacity: 0.1% improvement in cost per MW
  15. 15. 15 … mainly related to Gas USA & Canada and Renewables… mainly related to Gas USA & Canada and Renewables Group EBIT totals Eur 2,359.1 M due to Eur 1,657 M of gross asset impairments done in Q2 2013… Group EBIT totals Eur 2,359.1 M due to Eur 1,657 M of gross asset impairments done in Q2 2013… EBIT - Group D&A H1’14 vs H1’13 TotalTotal H1‘14H1‘14 -1,385.6 +1,685.1 -1,311.5 -7.0 Provisions -74.1 +1,692.1 Eur M 29 EBIT H1 2013 H1 2014 672.9 2,359.1 H1‘13H1‘13 -3,070.7 -1,304.5 -1,766.2 … due to 10% decrease in average net debt, 13 bp lower cost and capital gain on EdP sale … due to 10% decrease in average net debt, 13 bp lower cost and capital gain on EdP sale Net financial costs down 7%* to Eur -510.6 M …Net financial costs down 7%* to Eur -510.6 M … Net Financial Expenses - Group - 510.6 Jun 13 Net Financial Expenses Jun 14 Net Financial Expenses -550.4 +82.8 Capital gain EdP sale Finance cost from debt evolution +96.4 -467.6 Debt related costs 30 Financial HighlightsNet Financial Exp. evolution (Eur M) Debt related costs improve Eur +82.8 M Eur 96 M gross capital gain on EdP sale * 2013 adjusted according to IFRS 11 Eur 52.6 M higher costs due to lower tariff deficit income reverted in Q4 ’13 Eur 52.6 M higher costs due to lower tariff deficit income reverted in Q4 ’13 -139.4 Tariff deficit income & Other Eur 45.0 M EdP dividend collected in 2013Eur 45.0 M EdP dividend collected in 2013
  16. 16. 16 Results - Group % vs H1’13 % vs H1’13 H1’14H1’14 Eur M n/an/a n/an/a 184.9 -630.9 Non Rec. Results Non Rec. Results TaxesTaxes 31 -9.7%-9.7%121.7 Equity Contribution Equity Contribution H1’13H1’13 -17.3 1,500.7 134.8 PBTPBT 2,155.1 n/a240.0 Positive impact in H1 2014 of the sale of Itapebí and the nuclear JV in the UK H1 2013 Balance Sheet revaluation: Net after tax gain of Eur +1,538 M Negatively impacted by Neo results (drought and tariff review) Positively affected by the revaluation of Gamesa stake H1’13 included 2 large one-off impacts: asset impairments accounted at EBIT level partially compensated by positive effect of Balance Sheet revaluation at Taxes level … H1’13 included 2 large one-off impacts: asset impairments accounted at EBIT level partially compensated by positive effect of Balance Sheet revaluation at Taxes level … Higher Taxes due to a one-off impact in the United StatesHigher Taxes due to a one-off impact in the United States Reported Net Profit falls 13.0% to Eur 1,503.1 M and Recurring Net Profit down 7.5% to Eur 1,296.7 M Reported Net Profit falls 13.0% to Eur 1,503.1 M and Recurring Net Profit down 7.5% to Eur 1,296.7 M Reported Net Profit - Group 32 Eur M Non recurring Results & Others* Reported Net Profit +206.4 1,503.1 Recurring Net Profit 1,296.7 +326.0 1,728.0 1,402.0 H1’14H1’14 H1’13H1’13 %% -13.0 -7.5 * Includes Non Recurring Taxes and asset impairments Operating Cash Flow falls -3.9% to Eur 2,855.7 MOperating Cash Flow falls -3.9% to Eur 2,855.7 M
  17. 17. 17 Agenda Highlights of the period Analysis of results 33 Financing 34 53115311 Financing – Regulatory receivables Eur 1,445M pending to be collected by the end of June, of which Eur 341 M (220 + 121) correspond to 2014 Eur 1,445M pending to be collected by the end of June, of which Eur 341 M (220 + 121) correspond to 2014 Iberdrola now finances less than 15% of the sector deficit, compared to previous 35%Iberdrola now finances less than 15% of the sector deficit, compared to previous 35% Regulatory receivables pending to collect Dec-13 Regulatory receivables pending to collect June-14 1.037 1 Estimated at Dec-2013of generation taxes expected to be applied to reduce tariff deficit 2013 2 Taxes collected by Spanish Administration via new energy production, pending to be applied to reduce regulatory receivables outstanding balance.. Iberdrola estimation 2013 Regulatory receivables collected 1,571 1,0401,0402013 Tariff deficit -467-467 +341+341 2014 Regulatory receivables 1,445 1,104 220 2014 Tariff Deficit Generation taxes 12121212 2013 Tariff Deficit Generation taxes
  18. 18. 18 … leading to …… leading to … Adjusted Net Debt ex regulatory receivables totals Eur 24.2 bn …Adjusted Net Debt ex regulatory receivables totals Eur 24.2 bn … H1 Net Debt and Equity Equity 35,689 Net Debt 25,682 Eur M 35,080 27,936 H1’14H1’14 H1’13H1’13 Financing - Leverage Note all debt figures include TEI Adjusted Net Debt 24,237 25,783 35 Gen. Taxes not recovered 121 - Tariff Deficit 1,324 2,153 Net Debt down Eur 2.2 bn in one year and Eur 1.2 bn in the First Half of 2014 Leverage at 41.8% at H1’14 vs 44.3% at H1’13 Key messages … better credit metrics… better credit metrics Financing - Financial Ratios (1) FFO = Net Profit + Minority Results + Amortiz.&Prov. – Equity Income – Net Non-RecurringResults + Fin. Prov.+ Goodwill deduction + Dividends from companies accounted via equity– /+ reversion of extraordinary tax provision (2) Including TEI but excluding Rating Agencies Adjustments (3) RCF = FFO – Dividends paid in cash to shareholders – Net interest on hybrid debt issue 36 17.5% 17.5% 18.4% 19.0% 18.7% 19.6% H1 2013 FY 2013 H1 2014 Excluding tariff deficit 20.7% 20.8% 21.4% 22.4% 22.1% 22.7% H1 2013 FY 2013 H1 2014 Net Debt/EBITDA FFO/Net Debt RCF/Net Debt 3.9 4.0 3.8 3.6 3.7 3.6 H1 2013 FY 2013 H1 2014 Including tariff deficit
  19. 19. 19 As of today there is a strong Liquidity position of over Eur 10 bn covering more than 35 months of financing needs … As of today there is a strong Liquidity position of over Eur 10 bn covering more than 35 months of financing needs … Financing - Liquidity … and average debt maturity greater than 6 years… and average debt maturity greater than 6 years Cash & Short Term Fin. Invest.Cash & Short Term Fin. Invest. Total Credit LinesTotal Credit Lines AvailableAvailable Eur M Total Adjusted LiquidityTotal Adjusted Liquidity Credit Line MaturitiesCredit Line Maturities 2,097 8,081 10,178 37 2016 & onwards2016 & onwards 7,530 1,256 2,370 3,046 14,284 2016 2019+*20172014 2015 927927 329329 2,798 2018 3,320 Q3 Q4 * Includes comercial paper outstanding balance: Eur 1,003 M Debt maturity profile Download the Iberdrola Investor Relations app now www.iberdrola.com Discover the energy that goes with you !

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